Venk Reddy, CIO of Sustainable Credit, and Marcus Moore, Assistant Portfolio Manager, provided a behind-the-scenes look at how sustainability factors impact creditworthiness and how you, as a fixed income investor, can make a difference with your capital.
We believe effective ESG integration into the credit research process is essential for a truly sustainable portfolio. In our view, a creditworthy business operates in a long-term sustainable way. We view contaminated land, employee safety claims, or an unfunded pension liability through the same lens as we evaluate financial risks such as leverage, cash flows, and liquidity. This effort is fundamental to our investment process and differentiates us from traditional ESG — it is not an overlay, a screen, or an after-the-fact green wash.
We evaluate companies on our proprietary Sustainability Spectrum®, track them in our proprietary GreenSlateTM software and engage them directly to discuss opportunities for improvement. A creditworthy issuer may be one with sustainable strength relative to peers or one that is making visible progress toward appropriate sustainable practices, and we take our role in that progress seriously. Our dependable approach to credit investing ensures that every holding in our portfolio is proactively selected to meet both our fundamental and sustainability standards.
The stages of the Sustainability Spectrum® are: Awareness, Strategy, Execution, and Measurement. Using the Sustainability Spectrum® assists in identifying companies that are leaders in their sectors in key areas of sustainable business practices or who are making or are likely to make visible progress toward appropriate sustainable practices. Our repeatable approach to credit investing means every holding is proactively selected to meet our fundamental standards, which includes sustainable business practices.
We regularly publish Sustainability Profiles on current holdings, which demonstrate how we evaluate companies as it relates to sustainability factors. Please visit our library of present and past company examples from over the years.